Wintery January hurts US jobs growth

IT loses jobs this time around

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The succession of winter storms in the United States in January put the freeze on hiring, and according to a report from the Department of Labor this morning, the economy added only 36,000 net new jobs. That is a lot less than the 200,000-plus jobs that the American economy needs to just keep up with population growth – and a hell of a lot less than the number needed to put a big dent in the unemployment rate, which dropped four-tenths of a point to 9 per cent.

That is the largest decrease in the US unemployment in two years, and mirrors a similarly steep decline that president Ronald Reagan saw in January 1983 when the economy was on the skids and unemployment was a point higher after a disastrous mid-term election cycle the prior November. Current President Obama may take heart from this all, but 28 years ago the United States was a much more formidable economic power than it is today – it was more of a manufacturer and less of a financial engineer – and thinking that history is about to repeat itself with a two point drop in the unemployment rate as the economy takes off is very likely folly. (If it happens, wonderful. Happy to be wrong on that one.)

And the unemployment rate drop to 9 per cent was mostly due to 600,000 people dropping off the list of unemployed people because they told the Bureau of Labor Statistics (BLS) that they have stopped looking for work. There are still 13.9 million people in the US that are looking for work who can't find it. Worse yet, the BLS has revised downward the number of net new jobs it thinks the US economy created last year to 950,000, down by 150,000.

Just because the US economy only created 36,000 net new jobs does not mean that companies are not adding workers. It just means that local, state, and federal governments are slashing jobs as they can't balance their budgets – and that certain industries that are hurt by the weather (such as construction) continue to cut jobs or stand pat on their hiring.

According to the jobs report released by the BLS this morning, the manufacturing sector added 49,000 jobs last month, with car and car-parts makers adding 20,000 workers, fabricated metals makers adding 13,000, machinery makers adding 10,000 and electronics makers adding 5,000. Non-durable goods makers slashed 13,000 jobs, however, which didn't help. Retailers added 28,000 people in January after not hiring very many people in December. (Odd, isn't it, given where the holidays are.) Clothing stores added 15,000 people across the US in January, according to the BLS. The healthcare industry added only 11,000 workers, about half the rate it has been averaging over the past year. Construction companies cut 32,000 employees and transportation and warehousing firms cut 38,000 workers net; courier and messenger firms cut 45,000 jobs after a big employment bump in December.

The BLS does not track jobs by title and type, but rather by industry, so we can't get a good sense of how the IT departments of the United States are doing in terms of employment. But the news that Google has 6,000 jobs open and has had more 75,000 applicants for those positions would suggest that if there are not a lot of unemployed programmers and product managers, then there are a whole lot of people who are pretty unhappy with their current job situation. The Mountain View search engine advertising giant has a mere 24,400 employees.

While manufacturers may have added jobs in January, the computer and electronics manufacturers held their payrolls rock steady at just over 1.1 million workers, according to the January report. Within this group, computer and peripheral equipment makers dropped 100 people, leaving 166,300 workers, while communication equipment makers picked up 1,000 to reach 120,500. Semiconductor and electronic components makers added 300 workers, with an employment base of 376,600 as January came to an end.

In the information sector of the economy – which includes all the various media plus telecom services and hosting – jobs were down a smidgen to 2.7 million workers. Within this sector, telecom companies cut 9,700 jobs, leaving 878,900 workers. Data processing and hosting vendors also cut jobs in January; in this case, 4,900 people got pink slips, leaving 237,600 workers who are still getting paychecks.

The professional services and business services sector also cut jobs a bit, to an aggregate of 16.6 million workers. Within this group, companies engaged in computer systems design and related services cut 2,100 jobs against a base of 1.47 million workers. Management and technical consulting services companies also cut workers, in this case a very large 21,900 workers to leave just under 1 million people in their jobs after the cuts. ®